Product cycles, innovation and exports: A study of Indian pharmaceuticals

Abstract

This paper sheds light on the product cycle and neotechnology theories of trade in the context of generic pharmaceuticals. The paper studies the export performance of 177 Indian pharmaceutical firms for the post- liberalization period 1991-2004. The results indicate that technology proxied by foreign patent rights has a positive impact on exports. This suggests that developing countries with innovation skills for process innovations are capable of penetrating international markets in the later stages of the product cycle by using patents, which were the barriers to trade in the early stages of the product cycle. Thus, Indian pharmaceutical firms adept at reverse-engineering of brandname drugs have an opportunity to enter the global generic market for off-patent drugs.Product cycle, Exports, Foreign patents, Pharmaceuticals